Connect with us

    Hi, what are you looking for?

    Opinion

    Nigeria Week Ahead: Inflation, Naira and Oil in Focus

    Lukman Otunuga
    Lukman Otunuga

    By Lukman Otunuga is Senior Financial Market Analyst with FXTM

    Some semblances of stability have returned to global markets after US recession fears created shockwaves last week.

    Still, concerns over the health of the worlds largest economy linger with investors on high alert ahead of another busy week. With the US elections just months away, this negative development adds another layer of uncertainty. Much focus will be on the US CPI print, retail sales, and consumer confidence which are likely to shape expectations around how aggressively the Fed cuts rates.

    Regarding the fourth largest economy in Africa, the man theme will be the latest CPI print. One of the key themes in Nigeria in 2024 has been runaway inflation which jumped to 34.2% in June – its highest level since 1996. However, the incoming CPI print is expected to show prices slowing in July, cooling to 33.2% compared to 34.2% in the previous month. Given the CBNs aggressive approach towards raising rates, signs of cooling price pressures will be a breath of fresh air for consumers. It is worth nothing that the Central Bank of Nigeria has raised rates by a whooping 800 basis points in 2024.

    Looking beyond inflation, the next key event will be GDP published later this month. After expanding 3% in Q1, it will be interesting to see whether growth can be maintained in Q2. In the FX space, the Naira continues to gain against the dollar on the official exchange with the spot rate at N1589 as of Monday. 

    Regarding oil, it has extended its first weekly gain since early July thanks to geopolitical tensions in the Middle East. Rising oil prices may have a positive knock-on effect for the economy, especially when factoring how a major chunk of revenues is acquired from oil sales. However, this could be cancelled out by the rising cost of fuel imports which is costing Nigeria $600 million per month.

    Still, this is set to be another big week for the global commodity due to the monthly outlook from the International Energy Agency. Talking technicals, Brent has gained over 4% since the start of 2024 with prices trading above $80 as of writing. Key levels of interest can be found at $7, $82 and $82.80.

    Loading

    Spread the love
    Click to comment

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    ad

    You May Also Like

    News

    Ukrainian President Volodymyr Zelensky has proposed a potential exchange of Ukrainian-made drones for U.S. Tomahawk cruise missiles during a meeting with President Donald Trump...

    News

    Nigerian billionaire and Senator, Ned Nwoko, has refuted the recent viral claims of domestic violence made by his wife, actress Regina Daniels. In a...

    News

    TD Africa, leading technology solutions aggregator in Sub-Saharan Africa, has officially announced the onboarding of Zinox Technologies into its basket of global brands. This...

    News

    Former U.S. National Security Advisor John Bolton has been indicted on 18 counts of transmitting and retaining classified information, becoming the third prominent critic...